It is Halloween, and Lilo shows up at the Hula School costume party dressed as a dead hula girl and wearing a axe headband. However, after scaring the party guests, she is sent back home by Moses to change into a more decent costume. At home, Nani has some candy ready for trick or treaters, who do not often come to the house. Pleakley and Jumba are trying to figure out what kind of costumes to wear. Lilo asks Pleakley to make her a princess costume. While waiting, she meets up with Stitch in their tower. They talk about being scared, though Stitch claims that he fears nothing. Lilo admits that she is afraid of broccoli, clowns and a creepy old abandoned house that is on a hill. However, she shows Stitch that whenever she gets scared she sings "Aloha ʻOe" to help her cope with the heebie jeebies.
Meanwhile back at the party, A hissing shape shifting blob with green eyes shows up as a headless Lilo. It scares, Mertle, Elena, Teresa, and Yuki, and then the entire party who all runaway in fear. Lilo, now in a princess costume, returns to the party with stitch, only for the two of them to find place totally trashed. While Stitch goes off to search the kitchen, Lilo finds Mertle, Elena, Teresa and Yuki hiding under a table, terrified. While searching the fridge, Stitch comes face to face with the shape shifting blob which turns into water. Stitch becomes terrified and desperately tries to get to high ground. He almost drowns until the blob hears Lilo looking for him and flees. Lilo finds Stitched terrified frantically saying "hissing green eyes". Lilo is suspicious because Mertle, Elena, Teresa and Yuki to said they saw something hissing with green eyes.
Lilo and Stitch return home to check Jumba's Computer. Stitch has become so terrified of what he saw that he starts boarding up the windows and rearranging the furniture to keep the monster out. Lilo finds a match to the description Stitch and the girls made. The hissing blob with green eyes is identified as Experiment 300: designed to terrorize people by transforming itself into their worst fears. Lilo and Stitch go out to find 300, but with everyone dressed all scary it could be anyone.
At some point, Experiment 300 shows up at Lilo's house as Nani's worst fear, Cobra Bubbles. When Lilo and Stitch return home a failed search, Lilo quickly identifies Mr. Bubbles as Experiment 300 when he gives off a hiss. They rush in to capture him, but he escapes. Lilo, Stitch, Jumba and Pleakley chase after Experiment 300, calling him Spooky, to the old abandoned house that Lilo is afraid off. Despite both being very scared, Lilo and Stitch bravely enter the house while Lilo sings to herself Aloha ʻOe. Spooky continues to terrify all four of them with their worst fears. Even Stitch is too scared. However, by singing Aloha ʻOe to himself, he is able to overcome the heebie-jeebies. When Spooky notices that Stitch has faced his fears, and was thus undaunted by any other scary transformations, the former turns into a bat to escape, but is ambushed and captured.
Afterwards, Spooky finds his one true place, scaring trick-or-treaters on Halloween and haunting the old, abandoned house.
- Moral: If you face your fears, you'll likely get over them.
- Jumba referred to Spooky as "X-300" ("ex-three hundred") and mentions that his impression of Jumba's ex-wife is frightening, even comparing her to a particular fish resembling a lamprey eel, which reminds him of her "before face-lift".
- Lilo revealed that she is afraid of broccoli and clowns, the latter being her worst fear.
- Mertle shows a little compassion when she admits that Lilo should attend the Halloween party and also confesses that Lilo was right about her, Elena, Teresa, and Yuki's costumes being too boring. Regardless, Yuki points out that Mertle forced them to do this in the first place.
- Stitch spit out a lemon, saying, "Ew, organic!", implying he might not like lemons.
- However, in "Shortstuff", Stitch, as a giant, drank some lemonade from the cart he accidentally smashed without expressing any disgust, and in "Swapper", he drank a whole bowl of lemonade (albeit modified by Jumba to cause those who drink it to temporarily change colors), again without expressing any disgust, which would contradict this supposed dislike of lemons. It could be that either Stitch doesn't like organically-grown foods (as his heightened senses might have the unintended side effect of him tasting even the tiniest amounts of manure residue), he doesn't like the taste of unsweetened lemons or lemon juice, or him spitting out the organic lemon was nothing more than a simple joke.
- It would seem that, according to Spooky's impression of Jumba's ex-wife, Jumba's alien species naturally has poor grammar with regards to English.
- When Stitch hangs on to a plank in the abandoned swimming pool and stares down at the water in fear, the light reflections on his eyes are temporarily used as pupils.
- Lilo and Stitch use the song "Aloha ʻOe" from the original movie as a coping tactic to overcome their worst fears.